Future of Newspapers - Financial Strategies For An Industry

Financial Strategies For An Industry

While newspaper companies continue to produce much of the award-winning journalism, consumers of that journalism are less willing to pay for it in a world where information on the web is plentiful and free. Plans for web-based subscription services have largely faltered, with the exception of financial outlets like The Wall Street Journal, which have been able to generate substantial revenues from subscribers whose subscriptions are often underwritten by corporate employers. (Subscriptions to the Journal's paid website were up 7% in 2008.) Some general-interest newspapers, even high-profile papers like The New York Times, have been forced to drop paid internet subscription services. Times Select, the Times's pay service, lasted for exactly two years before the company abandoned it.

Within the industry, there is little consensus on the best strategy for survival. Some pin their hopes on new technologies such as e-paper or radical revisions of the newspaper such as the Daily Me; others, like a recent cover story in Time magazine, have advocated a system that includes both subscriptions as well as micro-payments for individual stories.

In crafting a strategy in the era of burgeoning sources of information, some newspaper analysts believe the wisest move is embracing the Internet, and exploiting the considerable brand value and consumer trust that newspapers have built over decades. But revenues from online editions have come nowhere near matching previous print income from circulation and advertising sales, and many newspapers struggle to maintain their previous levels of reporting amidst eroding profits (Newspapers get only about one-tenth to one-twentieth the revenue for a web reader that they do for a print reader).)

With profits falling, many newspapers have cut back on their most expensive reporting projects – overseas bureaus and investigative journalism. Some investigative projects often take months, with their payoff uncertain. In the past, larger newspapers often devoted a portion of their editorial budget to such efforts, but with ad dollars drying up, many papers are looking closer at the productivity of individual reporters, and judging speculative investments in investigative reports as non-essential.

Some advocates have suggested that instead of investigative reports funded by newspapers, that non-profit foundations pick up the slack. The new non-profit ProPublica, a $10–million–a–year foundation devoted solely to investigative reporting and overseen by former Wall Street Journal editor Paul Steiger, for instance, hopes that its 18 reporters will be able to release their investigative reports free, courtesy of partnerships with such outlets as The New York Times, The Atlantic and 60 Minutes. The Huffington Post also announced that it would set aside funds for investigative reporting. Other industry observers are now clamoring for government subsidies to the newspaper industry.

But investigative reports aside, what troubles some observers is that the reliability and accountability of newspapers is being replaced by a sea of anonymous bloggers, many with uncertain credentials and points of view. Where once the reader of a daily newspaper might consume reporting, for instance, by an established Cairo bureau chief for a major newspaper, today that same reader might be directed by a search engine to an anonymous blogger with cloudy allegiances, training or ability.